So we treat this as a loan secured on the receivables. Assets increase of course with the cash, but is it always going to be the current liabilities that gets increased on the other side as opposed to long term debt?
Receivables are a going concern of a company. The sales proceeds should be classified as the ST loan because the buyer of your AR would expect you to pass the A/R to them relatively shortly. Otherwise, you will have to pay them… So current asset up by PV of the A/R and current liability up by PV of the A/R
It makes perfect sense now, thanks.